Financial capital and financialization



Financial capital and financialization are not social, political or even morally reprehensible deviations in relation to an alternative and better capitalism

Financial capital and financialization as evolving phenomena in the 20th century were not born ab egg neither of new class hegemonies nor of major changes in the orientation of economic policy, historically dated. They cannot, therefore, be seen as social, political deviations or even as morally reprehensible in relation to an alternative and better capitalism, as certain currents of vulgar Marxism and critical Keynesianism tend to think.

These are processes inherent or typical of the development logic of capitalism, which cannot be annulled or reversed at the whim of alternative economic policies. The composition of classes and economic policy in general respond, as is well known, with degrees of freedom, to the structural demands and crises of capitalism itself. To understand why they are phenomena intrinsic to the historical development of this system, it is necessary to return to the dialectical presentation in which it consists The capital. However, it is fair to begin by discussing the writings of the author who has examined this issue exhaustively.

Starting from François Chesnais – not Karl Marx

In his latest book, Financial capital today (2016), François Chesnais distinguishes two extraordinary phenomena in the evolution of the capitalist economy: one of them is financial capital (something prominent already in the first half of the XNUMXth century) and the other consists of the plethora of financing capital (something that looms large in second half of the XNUMXth century). Now, these two phenomena are inserted in the global process of capital accumulation, which is driven at its base by industrial capital and commercial capital. François Chesnais points out, therefore, that the capitals that operate in the production of goods are fundamental in capitalism because they and only they make the generation of surplus value possible.

This is how this critical economist defines this first moment: “I use the term [financial capital] to designate an interpenetration, concentration and centralization of monetary, industrial and commercial capital” (Chesnais, 2016, p. 5). Now, this capital subsists today through transnational conglomerates that operate simultaneously in the industrial, commercial and financial sectors. By financing or financier capital (in a more critical tone), this author designates the forms derived from interest-bearing capital, which have experienced “spectacular growth in the last forty years (bonds, shares and derivatives) and which are operated by corporations financial institutions (banks and funds), as well as by the finance departments” (op. cit., p. 1) of companies in general.

To be clearer, the first can be shown through a separation. If large groups of companies that operate under the logic of industrial capital and commercial capital still exist in all nations of the world, there are also, now and almost always going beyond the national sphere, smaller groups of companies that distinguish themselves by also operating under the logic of interest-bearing capital. In other words, they are enterprises that operate in a combined manner both in the D – M – D' circuit and in the D – D' circuit, under the aegis of the latter. Since the classic book by Rudolf Hilferding (1985) first published in 2010, such companies have been considered as vehicles of financial capital. As Marx shows, financial capital in general, roughly fictitious, acts in a complementary, albeit contradictory, way to the capital that operates in the production and circulation of goods.

Rudolf Hilferding arrives at the conception of financial capital due to the need to descriptively understand a concrete configuration of capitalism in Germany. He noted that, in this country, at the beginning of the 1985th century, an important part of the capital invested in industry did not belong to the capitalists who ran them, but was supplied to them through banks, a privileged interface between the financial subsystem and the production subsystem/ circulation. Faced with this situation, he called “financial capital banking capital, therefore, capital in the form of money that, in this way, is transformed into industrial capital”. As he pointed out, “financial capital evolved with the development of the joint stock company, reaching its peak with the monopolization of industry” (Hilferding, 219, p. XNUMX).

Therefore, a process of concentration and centralization of capital had occurred in Germany, which had created, at the same time, large monopolistic industries and a stock market administered by banks, the result of which Rudolf Hilferding describes as follows: “Industrial income gains a safe and secure character. continuous; As a result, the possibility of investing bank capital in the industry becomes increasingly extensive. But the bank has bank capital and the majority owners of bank shares have control over the bank. It is evident that, with the increasing concentration of owners of fictitious capital, which gives power to banks, the owners of capital that gives power to industry are increasingly the same” (op. cit., p. 219).

In an article written almost forty years before the aforementioned book, Financial capital and financial groups (1979), François Chesnais, based on positions by Suzanne de Brunhoff in her book Monetary policy (1978), published six years earlier in France, presents criticisms of Hilferding's central thesis.[I] Because this process had become widespread in globalized capitalism and because its forms had diversified in relation to that observed in Germany. But these two were not the most important notes.

This author indicated that her concept of financial capital differed from that found in Marx's writings. By admitting that it represented the fusion of industrial capital with monetary capital, he had abolished the contradiction that existed between one and the other. He had therefore hidden the parasitic character of the second. “As he is not dialectical in his method” – said the French economist – “it was easy for Hilferding to leave criticism and erase any indication of the parasitic character of financial capital” (apud Chesnais, 1979, p. 155).

Suzanne de Brunhoff presents in her book and François Chesnais welcomes in the 1979 article, at least to a certain extent, a notion of financial capital in which it is confusedly identified with the notion of financing capital or, in Marx's terms, with capital interest bearer: “The notion of financial capital, for Marx, encompasses different types of institutions and practices: banking system, stock exchanges, joint-stock companies and, sometimes, (…) the action of the 'financial capitalist' who lends D to receive D' from the industrial capitalist. All of this is presented in a very large disorder, but the fundamental notions can be distinguished and articulated among themselves”. (Brunhoff, 1978, p. 104).

Returning to Marx, without abandoning Chesnais

Now, this definition presented above is defective because (a) it is not and cannot be found in Marx; (b) confuses a form of capital with the supports of that form, that is, with certain institutions that move interest-bearing capital in its broadest sense. Behold, for Marx, this is the only possible form of capital; outside the D – M – D' circuit, it becomes a form in which capital becomes – itself – a commodity.

Consequently, as he explains, “it is characteristic of this commodity – of capital as a commodity – the loan form, rather than the sale form” (Marx, 2017, p. 388). Precisely for this reason, the gain on this capital, which is realized through the circuit D – D' and which consists of ∆D = (D' – D), does not come as profit, but as interest. Once independent – ​​he explains – it can now “also serve for transactions without any relation to the capitalist process of reproduction” (idem, p. 397).

Interest-bearing capital, the lending of money to obtain more money, is the elementary constitutive form of what Marx will call the credit system. This system is complex and there are different types of loan capital. The sale of merchandise with deferred payment implies the creation of a bill of exchange, which “constitutes the basis of credit money, banking cells, etc.” (idem, p. 451).

Money lending generally involves the creation of debt securities, both private and public, which are sold and bought in specific markets. Investments in companies take the form of share capital that moves the stock markets. The transformation of risks into commodities gives rise to insurance and derivatives. The collective ownership of these assets, mainly in contemporary capitalism, takes place through funds of different types. The enormous expansion of the sphere in which these capitals circulate – fueled in its own movement by crises of overaccumulation of industrial capital – results in financialization.

In the aforementioned article, François Chesnais strives to arrive at a concept of financial capital that is in accordance with the economic categories found in Book III of The capital. Firstly, it shows that it is a necessary consequence of the development of capitalism itself. He later recalls, together with Hilferding, that Marx had said that with “interest-bearing capital the capitalist relationship takes on its most external and most fetishistic form” (Marx, 2017, p. 441).

In addition, he asserts that this becomes a central consideration for understanding capitalism itself. On the other hand, still relying on Marx, he indicates that loan capital, when it reaches its full development, tends to assume the character of social capital in contrast to private capital that prospers in the production of goods.

This is what Marx wrote: “With the development of large-scale industry, [loan] capital, when it appears on the market, increasingly tends not to be represented by an individual capitalist, by the owner of this or that fraction of the capital existing on the market. , but it presents itself as a concentrated, organized mass, which, in a completely different way from real production, is under the control of bankers, representatives of social capital”. (Marx, 2017, p. 416)

In addition to these two characteristics, the key that unlocks the “secret” of financial capital, according to François Chesnais, is the analysis of its characteristic circuit, which is D – D', money that transforms into more money without a generation process acts inside between the first and second moments of the circuit. Now, this occurs because he, in principle (if he is not rolled), takes the value he adds to himself from some source that is external to him.

As can be seen from reading The capital, one of these sources is the industrial capital that controls the production of goods, something that is very characteristic of the capitalist mode of production. But also, as is well known, it punishes rents in general just like the old usurious capital. Hence Chesnais draws the conclusion that it is parasitic capital: “financial capital” – he says – “reproduces in the capitalist phase all the previous parasitic characteristics” (Chesnais, 1979, p. 148), which are intrinsic to it.

The theses of this French economist, certainly notable, are also based on the statements of Vladimir Lenin in his famous pamphlet on imperialism as the final phase of capitalism (2002). This author derives from the parasitic nature of financial capital the idea that the gains obtained are a form of income similar to land income (a gain that comes from property and not from the function performed in the production process) (Paulani, 2016). As “finance capital is different from industrial capital in terms of its mode of development' – he says –, its supremacy means the hegemony of the rentier over industrial capital” (Chesnais, 1979, p. 157).

It may seem strange, but these condemnatory statements about each and every type of financing capital are not found in Marx's main writing. In particular, he does not say that loan capital and equity capital are merely parasitic, because they are gains that come from their functionalities in the accumulation process – and do not, therefore, come from mere ownership. Furthermore, he considers that share capital represents a progressive socialization movement within the capitalist mode of production. What Marx says specifically is that this development of capitalist social relations engenders yet another unproductive class fraction, in addition to the traditional ones:

It produces a new financial aristocracy, a new class of parasites in the form of merely nominal designers, founders and directors; a whole system of speculation and fraud with regard to the founding of joint-stock companies and the launch and trading of shares. It is private production, without the control of private property. (Marx, 2017, p. 496).

As we know, financing capital and industrial capital have been intertwined since the moment the mode of production came into existence. What the idea of ​​financial capital points to is a development in which these ties tighten until the formation of command units in which industrial capital becomes subsumed under share capital, whether in the form of a closed society of a few capitalists or in the form of corporation in which ownership of shares is broad, although concentrated. And this process does not evolve without the development of an entire financial market in which exchanges, funds and investment banks participate.

This is how this process is described by Chesnais himself, not as a fusion as Hilferding incorrectly proposes, but as a contradictory intertwining: “As a result of a joint movement, increasingly intertwined, of the processes of concentration and centralization of capital, financial capital seeks to develop using a set of operations that combine the production and realization of surplus value (D – M – P –M' – D'), but also the increasing use of all types of operations D – D’.” (Chesnais, 1979, p. 153)

Staying with Marx – the socialization of capital

If this description seems quite correct, there is no doubt that François Chesnais' understanding of what he himself calls financial capital is still insufficient. To clarify this issue it is necessary to go back to Marx's original text as it contains a rigorous understanding of the social relations of capitalism. In this sense, firstly, it is necessary to see that the issue of the intertwining between industrial capital and financing capital is also addressed in section V of Book III of The capital which deals with interest-bearing capital – and not income-bearing capital. In the three hundred pages that contain the materials in this section, the term “rentismo” does not appear once, the use of which is actually found in authors such as Proudhon, Keynes and their followers.[ii]

The above that elucidates this issue can be found in chapter XVII, which deals with the “role of credit in capitalist production”. It is from there that a crucial point can be discovered: if the processes of centralization and concentration are necessary for the emergence of financial capital to occur, they are not capable in themselves of justifying this emergence, as François Chesnais seems to think. However, to reach a more comprehensive understanding of the phenomenon it is necessary to carefully examine the content of this chapter.

One of the functions of credit, Marx points out, is to reduce circulation costs: it partially eliminates the use of money in transactions; accelerates the circulation of goods; and, finally, it makes it possible to replace gold money with paper money.

For the question examined here, the relevant function of the credit system is that it is the engine of equalizing the rate of profit, a device – says Marx – “upon which all capitalist production rests” (Marx, 2017, p. 493). It should be added to this that the commands of the credit system, that is, banks and other financial agents, to exercise this function, have to carry out constant supervision of isolated capitalist companies in general, rewarding those that are profitable and punishing those that are not profitable.

Now, it is precisely the internalization of this function, through the subsumption of industrial capital under the command of financiers, that is, the constitution of corporate capital that constitutes financial capital itself. For this to occur, the relationship between industrial capital and financing capital, which always appears as a contradictory intertwining, must no longer occur between capital units external to each other, but instead occur in large business units. Therefore, external supervision of financing capital over industrial capital is internalized.

But the third function pointed out by Marx is also very relevant for understanding the constitution of both financial capital and the process of financialization (which had not yet become comprehensive and dominant in his time). Therefore, the expansion of production and the growth in the size of companies began to require another form of organization than the isolated company. And this form is above all the joint stock company and the formation of business corporations. In this advance, says Marx, companies that were managed by their owners are now managed by managers and thus become social enterprises. Here's what he says about it:

Capital, which, as such, is based on a social mode of production and presupposes a social concentration of means of production and labor forces, thus directly acquires the form of social capital (capital of directly associated individuals) as opposed to capital private, and their companies present themselves as social enterprises as opposed to private companies. It is the suppression of capital as private property within the limits of the capitalist mode of production itself. (Op. cit., p. 494).

In this process, says Marx, the distinction between the entrepreneur's profit and the interest paid by isolated companies to banks and other lenders, characteristic of the classical form of capitalist organization, becomes blurred; It then takes the form of earnings, dividends or bonuses: “The truly active capitalist becomes a simple manager, administrator of other people's capital, and the owners of capital become mere owners, simple monetary capitalists. Even though the dividends they receive include interest and business gains, that is, total profit (…), this total profit is now received only in the form of interest, that is, as simple remuneration for the ownership of capital”. (idem, p. 494).

Profit thus appears (…) and not just part of it, interest, which derives its justification from the borrower's profit) as a simple appropriation of other people's surplus labor, arising from the transformation of the means of production into capital, that is, from its alienation from the real producer, from his opposition, as someone else's property, to all individuals who take an active part in production, from the manager to the last day laborer. (idem, p. 495)

In other words, this development of the capitalist mode of production generates a form of extraction of surplus value from productive workers of use values ​​and value that would justify, perhaps (and only provocatively), the use of the term “jurism”, but in Do not use the term “rentismo” at all. It is important to note that this development transforms, replacing in another way, the contradiction between the private character of appropriation and the social character of production. However, this replacement does not imply the overcoming of capitalism, but the coming of a “stage” of socialization within it that Marx saw positively, as he thought it already indicated the need for a new mode of production in which the social character of production would be changed. according to the way in which the social product is distributed.

This is what he says: “This is the supersumption of the capitalist mode of production within the capitalist mode of production itself and, therefore, a contradiction that cancels itself out and presents itself prima facie as a simple transition phase to a new form of production. Its mode of manifestation is also that of a contradiction of this type [that is, what appears in the sphere of the circulation of goods and the distribution of income must also reflect this supersumption – EP]. In certain spheres, it establishes a monopoly and, as a result, causes state interference [that is, something that happens to protect capitalism from the capitalists themselves, but which does not receive approval from the author – EP]. (idem, p. 496).

This process of socialization does not engender the socialism of workers, but the socialism of capitalists (Prado, 2021), that is, a reformed sociability within the system itself in which a good distribution of income does not thrive, but, on the contrary, an enormous concentration that remains under the control of a few: “What is sought, ultimately, is to expropriate all individuals of their means of production, which, when social production develops, cease to be means and products of private production to become convert into means of production in the hands of associated producers, therefore, into social property of the latter, since they are already their social product. Within the capitalist system itself, however, this expropriation presents itself as an antagonistic figure, as the appropriation of social property by a few, and credit increasingly gives these few individuals the character of simple adventurers”. (idem, p. 498).

It cannot be thought that Marx intended to show a smooth path, without ruptures, towards socialism, because, in fact, he only shows that a process of socialization arises and imposes itself in the course of the temporal evolution of capitalism itself. In this sense, he shows how the very development of the mode of production based on surplus value demands the socialization of capital – even explaining how this happens. And this final consideration is important because it demonstrates that financial capital and financialization, as concrete phenomena that emerge in the history of this system, are nothing more than striking expressions of this process of socialization, which, in fact, is not strange to the evolution of capitalism – behold, is inherent to it. And this process tends to increase the effectiveness of the capital relationship, that is, the extraction of surplus value by industrial capital.

* Eleutério FS Prado He is a full and senior professor in the Department of Economics at USP. Author, among other books, of Capitalism in the 21st century: sunset through catastrophic events (CEFA Editorial). []


Brunhoff, Suzanne de. Monetary policy – ​​An essay on Marxist interpretation. Rio de Janeiro: Peace and Land, 1978.

Chesnais, François. Capital financier and groupes financiers: recherche sur l'origine des concepts et leur utilisatiom actuelle in France. Center d'etudes et de recheches sur l'enterprise multionale, University of Nanterre, 1979.

Chesnais, François. The globalization of capital. São Paulo: Shaman, 1996.

Chesnais, François. Finance capital today – Corporations and banks in the lasting global slump. Leiden, Boston: Brill, 2016.

Hilferding, Rudolf. the financial capital. So Paulo: Nova Cultural, 1985.

Lenin, Vladimir I. Imperialism – Superior phase of capitalism. São Paulo: Centauro, 2002.

Marx, Carl. The capital. Criticism of Political Economy. Book III. São Paulo: Boitempo, 2017.

New, Jorge. Chesnais' theory of the crisis of contemporary capitalism and his defense of life on the planet. Manuscript, 2024.

Paulani, Leda M. Accumulation and rentism: rescuing Marx's rent theory to think about contemporary capitalism. Political Economy Magazine, vol. 36 (3), no. 144, p. 514-535, 2016.

Prado, Eleutério FS Techno-feudalism or socialism of capital. Economy and Complexity Blog, 2021. Available at


[I] The contents of the article mentioned here are taken up without major changes in chapter XI of The globalization of capital (1996)

[ii] Chesnais himself endorses the definition given by Joan Robinson: “We use the term rentier in an extended sense to represent capitalists in their aspect as owners of wealth as opposed to their aspect as entrepreneurs. We include dividends in the remuneration of rentiers, as well as interest payments, and we incorporate the sums given to their families by entrepreneurs who own their own businesses” (apud Chesnais, 2016, p. 9).

See this link for all articles


  • Introduction to “Capital” by Karl Marxred triangular culture 02/06/2024 By ELEUTÉRIO FS PRADO: Commentary on the book by Michael Heinrich
  • The STF, Artificial Intelligence and the Labor Courtsouto-maior_edited 07/06/2024 By JORGE LUIZ SOUTO MAIOR: The implementation of the replacement of the human being by AI presupposes that it has already been trained to act in the way desired by the ruling class
  • The strike at federal Universities and Institutescorridor glazing 01/06/2024 By ROBERTO LEHER: The government disconnects from its effective social base by removing those who fought against Jair Bolsonaro from the political table
  • Impasses and solutions for the political momentjose dirceu 12/06/2024 By JOSÉ DIRCEU: The development program must be the basis of a political commitment from the democratic front
  • Franz Kafka, libertarian spiritFranz Kafka, libertarian spirit 13/06/2024 By MICHAEL LÖWY: Notes on the occasion of the centenary of the death of the Czech writer
  • Union registrationSUBWAY 11/06/2024 By LAWRENCE ESTIVALET DE MELLO & RENATA QUEIROZ DUTRA: The Ministry of Labor has decided to grant union registration to Proifes. However, union registration is not the same as union representation
  • Confessions of a Catholic LadyMarilia Pacheco Fiorillo 11/06/2024 By MARILIA PACHECO FIORILLO: Congenital reactionism is not only the preserve of evangelicals
  • Regionalist literature in the 21st centuryCulture the corridor 06/06/2024 By DANIEL BRAZIL: Commentary on Benilson Toniolo's novel
  • A myopic logicRED MAN WALKING _ 12/06/2024 By LUIS FELIPE MIGUEL: The government does not have the political will to make education a priority, while it courts the military or highway police, who do not move a millimeter away from the Bolsonarism that they continue to support
  • About artificial ignoranceEugenio Bucci 15/06/2024 By EUGÊNIO BUCCI: Today, ignorance is not an uninhabited house, devoid of ideas, but a building full of disjointed nonsense, a goo of heavy density that occupies every space